You have DEFRA, we have the FSA, that stands for Farm Service Agency, under the umbrella of the USDA, standing for the United States Department of Agriculture. Just as your government saw the need to change from the Min of Ag, we had to change from the ASCS, that is the Agriculture Stabilization and Conservation Service, to the FSA. Same office, same staff, same complicated procedures, just a nifty new name and a promise of more efficiency. Each year like sheep US farmers dutifully trek to their respective county FSA offices to report their crops and sign up for "the program". "The program" refers to whatever farm program we are under at the time. I farm in two counties, hence I get the added pleasure of visiting 2 offices. With the August 14th deadline to sign up for "the program" looming I managed to hit one county office Monday, and one this afternoon, and am proud to report all acres are duly accounted for for the 2009 crop year, and all landlord signatures have been gathered, I am in "the program" and all my acres are certified, meaning the FSA knows what was planted when on every arable acre I own or rent.
This year unlike years past, we had the option of signing into our old Direct payment system, or opting for the new ACRE system. ACRE stands for Average Crop Revenue Election, while the old program DCP stands for Direct and Counter-cyclical program. ( I seem to recall a certain FW writer complaining that ACRE was some sort of market distorting tool for US farmers, someone tell me if I am mistaken in this.) Upon arriving at my first office on Monday I was promptly handed a 14 page explanation of the differences between the two programs, in a last ditch effort by the FSA to explain their confusing programs to a rather simple farmboy such as myself. My mind was already made up, based on a very scientific approach. After several months of reading various sources of propaganda about both options and understanding little of what I read, I asked but one question...."how many farmers in the county have signed up for ACRE". The answer, none. Fair enough, what is good enough for everyone else is good enough for me, I will take the DCP. I posed the same question today, and got the answer of, "maybe one" again I signed into the DCP.
From time to time I read something in Farmers Weekly or some other source about how heavily subsidised we are in the USA, that is, what do you say, a bunch of tosh?? Straight from my 14 page explanation I can tell you a little about how we are subsidised. For instance, the 2009 target price for wheat is $3.92 cents per bushel, that is $146.34 per ton in your measuring system. The direct payment, ie the payment I get every year is .52 cents per bushel, or $19.41 per ton. It is figured by using a yield for each particular farm, generated by some voodoo system the FSA uses, based loosely on actual county historical yields. For the sake of ease, lets say my yield is 37 bpa, roughly a ton, and that actually is in the ball park for most of the farms. My guaranteed payment is then $19.24 per acre per year, on my wheat base acres. Each farm has a different crop base, again based on historical data for that farm. A 100 acre farm may have a 20 acre wheat base, a 15 acre grain sorghum base, a 10 acre corn base, maybe a 20 acre soybean base with perhaps a 1 or 2 acre barley and/or oat base from the old days when more of those grains were grown. Out of 100 arable acres, you may only have 60 or 70 acres drawing a direct payment, because the historical planted crops included some non-program crops. These payment are only for crop land, there is no payment for pasture, unless you have converted cropland to pasture and kept the reporting requirements up to date.
The next part of the equation is the Loan rate, for wheat $2.75 per bushel, about $101 per ton. This is the amount of money the government will actually loan you against your crop. In the old days(1980s) this was the way the US government got stuck with huge stock piles of grain, from farmers taking out loans and defaulting because the grain price was below the loan rate. In an effort to keep this from happening again, our government came up with a Loan Deficiency Payment, or LDP, this occurs when the cash price of grain fall below the loan rate, it is roughly the difference between loan rate and cash price. You can take the LDP at any time and retain ownership of the grain, but you cannot take a LDP after you have lost ownership. Along with this under the DCP is the possibility of a countercyclical payment, in the case of wheat the maximum is 65 cents a bushel, or $24.05 per ton. Rarely has the CC payment kicked in, the average price has to be low enough during the entire marketing year for a CC payment to be issued.
ACRE is intended to be a better option during low price years. This year does not appear to be one of those. Between a reluctance to take the 20% lower direct payment to enroll in ACRE along with high grain prices and a difficulty understanding the ACRE program it appears few American farmers will choose that option this year, but they still have the option to enroll in ACRE next crop year. For my part, I continue to get more and more confused, either as a result of old age, or more complicated government thinking, or maybe a little of both.